U.S. Plans for Trade Are Stalled

Tuesday

Mar 1, 2011 at 5:09 AM

Republicans have refused to allow a South Korean free-trade deal to move forward until the White House makes similar progress on deals with Colombia and Panama.

SEWELL CHAN

WASHINGTON — President Obama has made expanding exports a centerpiece of his plan for accelerating the economic recovery, but in recent weeks, his trade agenda has nearly ground to a halt amid partisan feuding.

Although the White House renegotiated a pivotal free-trade agreement with South Korea in December, scoring rare bipartisan praise, House Republican leaders have refused to allow the deal to move forward. They want the administration to make progress first on similar accords with Colombia and Panama that face stiff opposition from labor unions and liberal Democrats.

To add to the pressure on the administration, House Republicans in February blocked a big expansion of trade adjustment assistance — which provides cash, training, relocation, job search and other benefits to workers displaced by globalization — from being renewed. Many of the 220,000 workers who took part in the program last year could have their benefits reduced as a result.

Another program, which gives duty-free preferences to 4,800 products from poor countries that are allies of the United States, expired in December after a Republican senator, Jeff Sessions of Alabama, blocked a vote to extend it. Mr. Sessions acted partly at the behest of a sleeping-bag manufacturer in his state, which argued that the preferences put it at a disadvantage.

Taken together, the disputes amount to a stalemate on what Mr. Obama has called a critical priority: expanding American competitiveness in manufacturing and other export-related sectors.

“In 30 years I have not seen trade policy in such disarray as it is now,” said Howard F. Rosen, a trade expert at the Peterson Institute for International Economics, a research organization here.

The standoffs have come to overshadow what trade proponents had seen as a major accomplishment: the completion in December of a free-trade agreement with South Korea, the largest such deal since the North American Free Trade Agreement took effect in 1994.

The Korea agreement was originally negotiated and signed in 2007, under President George W. Bush. But Democrats in Congress refused to give approval to the agreement, saying that it did not do enough to open market access for American autos and beef.

Under the revised agreement reached in December, both countries gave themselves more time to eliminate their tariffs on autos; the deal gained the support of the Ford Motor Company and the United Auto Workers, which had opposed the earlier version.

Republicans now want the administration to make similar progress on trade agreements that were reached with Colombia in 2006 and Panama in 2007. Although both economies are far smaller than Korea’s, the Colombia accord in particular has been an emotional flashpoint for labor unions, which cite a legacy of violence against labor leaders in Colombia.

Most experts agree that the violence has abated recently, and Colombia’s new president, Juan Manuel Santos, who took office in August, has made completion of the trade deal a priority. Mr. Obama expressed support for completing the Colombia and Panama deals in his State of the Union address in January, and his trade representative, Ron Kirk, said the goal was to complete the deals by the end of the year.

But House Republican leaders say that while they support the new focus on completing the Colombia deal, it has already taken far too long.

“We’ve made it clear that the time has run out on Colombia and Panama,” said Representative Kevin Brady, Republican of Texas, who leads the trade subcommittee of the House Ways and Means Committee. “It is time to move on them, along with Korea, in the first six months of this year.”

Mr. Brady said the three deals had to be submitted to Congress as a package. “It would do great damage to our bipartisan efforts on trade if the administration sends Korea up by itself right now,” he said.

Administration officials have met with the A.F.L.-C.I.O. and Human Rights Watch and with officials in Colombia, in what Mr. Kirk called an intensified effort to get the work done. And on Friday, Senator Max Baucus, the Montana Democrat who leads the Finance Committee, which oversees trade, met with Colombian union leaders.

But House Republicans say those gestures have not yielded specific results. Along with declining to support Korea as a stand-alone deal, they have tried to turn up the pressure to complete the two Latin American deals by refusing to support other trade programs.

Two such programs expired Feb. 12: a two-year-old expansion of Trade Adjustment Assistance, which dates to 1962 and helps workers dislocated by free trade, and the Andean Trade Preference Act, which gave Bolivia, Colombia, Ecuador and Peru duty-free access to segments of the American market in exchange for help in reducing the production of narcotics.

The administration has called for Congress to immediately renew the trade adjustment aid, without preconditions. “As a result of this inaction, 155,000 Americans will lose access to the job training they need to provide for their families and compete in the global economy,” said Gene Sperling, director of the National Economic Council. But so far Republicans have not budged.

“It’s absolutely reprehensible,” said Representative Sander M. Levin of Michigan, the top Democrat on the Ways and Means Committee, who said workers were suffering as a result of Republican obstruction. “They should not hold people who are dislocated hostage to a trade agreement, or anything else.”

White House officials also said the Republican maneuvers were counterproductive: The Andean preferences, which began in 1991, have lapsed just as the United States was trying to get Colombia to strengthen labor protections as part of the negotiations to revise the 2006 agreement.

A third program, the Generalized System of Preference, also has expired, but for parochial reasons, not partisan ones. Mr. Sessions, the Alabama senator, blocked the program from being renewed past its Dec. 31 expiration unless changes were made to protect Exxel Outdoors, a sleeping-bag manufacturer with a plant in Haleyville, Ala., from competition in Bangladesh.

“Why should my government make laws that are detrimental to American workers?” asked Harry Kazazian, the company’s owner.

The preference system, which began in 1976, is intended to help developing countries by allowing duty-free entry for certain products. Mr. Kazazian says his product — sleeping bags — should not be included in the program, but a quasi-judicial agency, the United States International Trade Commission, has disagreed. Most sleeping bags in the United States are imported from China, and indeed, Mr. Kazazian controls a sleeping-bag plant there.

All three programs — Trade Adjustment Assistance, the Andean preferences and the Generalized System of Preference — could well be renewed if the Colombia and Panama deals move forward. And the White House says it has made progress on other fronts, including talks on a proposed Trans-Pacific Partnership, which would link the United States to economies from Chile to Singapore, and on reviving the long-stalled Doha round of world trade negotiations.

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